Observations from Iraq, Iran, Israel, the Arab world and beyond

Iranian President Mahmoud Ahmedinejad is locked in a dispute with parliament over his economic plan, which would drastically cut subsidies in an effort to save $40 billion and make Iranians' economic life harder in the face of tough sanctions proposed by the U.S.

The state subsidizes many basic goods, including fuel, but a looming deficit and the threat of more sanctions are putting pressure on the government to save more money.

Ahmedinejad cannot afford to alienate his base, most of whom were won over with costly development projects in rural areas. Therefore, the proposed cuts will target mainly middle-class and wealthy Iranians while the money saved could be used to pump aid to the poor.

Critics say the new plan is merely a way for Ahmedinejad to cut spending while siphoning more money to his own supporters.

After months of tug-of-war, parliament finally approved a more conservative version of the president's reform plan that would save only $20 billion, citing the threat of inflation if subsidies were cut too aggressively. Last week, the Guardian Council signed off on parliament's version.

But Ahmedinejad isn't giving up, calling for the plan to be put to the people in a popular referendum. Such a referendum would have to pass parliament but would ultimately be issued by Supreme Leader Ayatollah Ali Khamenei.

Ahmedinejad's tactics have drawn sharp criticism from several prominent lawmakers, who claim the president is legally obliged to implement the law that was passed by parliament and approved by the Guardian Council.

"To further clarify [the issue] for the people and avert a one-sided argument, we are ready to defend the national interest, the people's interest and the country's economy in a debate with Mr. Ahmadinejad," lawmakers Gholamreza Mesbahi Moqaddam, Ali Tavakoli, and Elias Naderan said in a joint statement this week. "However, it would be wise if he assigned the task to economic experts, since he is not one."